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KredEx begins offering the first crisis measures in cooperation with banks

27.03.2020

The continuing spread of the coronavirus has resulted in serious disruptions to the economic activity of Estonian companies. To help companies, the state-owned financial institution KredEx has developed crisis measures, the first of which will start to be offered on Monday. However, entrepreneurs can already examine the specific terms and conditions today at www.kredex.ee/koroona. Implementation of the crisis measures will take place through banks.

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Koroonaviirus COVID-19
Koroonaviirus COVID-19

According to the CEO of KredEx, Lehar Kütt, KredEx will help entrepreneurs with an extraordinary loan guarantee and, if necessary, with an extraordinary loan, and it is ready to take on higher risks than before. “We developed the packages of measures based on the different possible courses that the crisis may take. The extraordinary loan guarantee for issuing new loans or relaxing the repayment schedules of existing bank loans will help to prevent or avoid the liquidity issues of companies. We can overcome this crisis, if we all work together. Entrepreneurs, the public sector and banks are working to keep businesses running and to preserve as many jobs as possible through this,” said Kütt.

Services will gradually become available for businesses. KredEx will begin granting capital loans, investment loans and loan guarantees in larger amounts once KredEx has been allocated the necessary capital for this with an additional budget, and once the Riigikogu has changed the Support of Enterprise and State Loan Guarantees Act.

According to the Minister of Foreign Trade and Information Technology Kaimar Karu, the aim today is to enable the KredEx measures as soon as possible, and to adjust the terms and conditions on a running basis hereinafter. “We are collecting feedback from entrepreneurs about the suitability of the measures on a rolling basis, and if possible, we will launch new measures once we can see that the existing ones cannot cover the needs,” said Karu.

“It is certainly important to emphasise that the KredEx crisis measures package is intended for companies in all fields and of all sizes. In the event of payment difficulties, I recommend to contact your bank at the first possibility. Then, you will be able to access the KredEx measures through your bank as well,” said Karu. “For companies that are currently able to expand their production instead, KredEx has a separate measure that should certainly be considered if such a need arises. In several sectors, the situation is favourable for offering innovative solutions which, in turn, may be of help to our other local companies,” Karu added.

Steps for an undertaking to alleviate liquidity problems.

  • Firstly, an undertaking should think through a plan/vision for themselves on how to bring the company out of difficulties. After that, they should contact their bank and ask for a new loan or relaxation of the repayment schedule for an existing loan. Almost all banks have expressed their willingness to allow grace periods for undertakings affected by the crisis. We ask undertakings for their understanding and to give banks time to go over all of the terms and conditions of KredEx’s new services.
  • If the bank sees a need for this, they will involve KredEx in the implementation of the crisis measures. There is no need to address KredEx directly – implementation of the measures will be carried out in cooperation with the bank. KredEx cooperates closely with all of the major banks operating in Estonia, through which KredEx's support is easily able to reach undertakings.
  • If a positive solution is not reached in the previous steps, the undertaking will also be able to apply for an extraordinary loan from KredEx. Use of the possibility to apply for a loan from the bank should be given priority and, if necessary, KredEx’s extraordinary loan guarantee should be used in order to be granted the loan. The extraordinary loan can be applied for as of 3 April. Loans will not be paid out before the state has allocated KredEx the capital required for this. This will likely not happen before mid-April.

The target group of KredEx includes all Estonian companies, except for the exclusions regarding fields of activity that were already in effect. In addition, the financial status of the company must be in order as at 31 December 2019, i.e., the company may not have already encountered difficulties before the crisis. The crisis measures are intended for companies whose difficulties are directly or indirectly caused by the coronavirus outbreak.

Karu noted that throughout the years, KredEx has proven its capability for managing such measures, and in relation to the new measures, it has begun to grow its capability. “It is very positive to see that KredEx managed to react quickly on their side as well, to offer the required input, and to review their service portfolio in light of the new requirements.”  

The specific terms and conditions of the first crisis measures can be found on the KredEx website www.kredex.ee/koroona. Information is constantly updated and the site includes current information on the implementation of the packages of measures, depending on the duration and extent of the pandemic. You can also find other useful information for coping with the crisis.